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hard-money-loan | HardMoneyMan.com LLC

With conventional loans from large banking institutions becoming increasingly out of reach for small business owners, landlords and house-flipping real estate investors, hard money lenders have taken over the market, becoming the main source of financing for small real estate investors.

What Projects Can Be Financed by Hard Money Lenders?

The range of projects financed from hard money loans has expanded continuously covering anything from acquisitions to rehabilitation and staging projects. The best part is that these loans are accessible to anyone, from well reputed real estate investment companies to individual who are trying to find their way on the market or are about to hit the jackpot.

Tying the Loan to the Property

This increased accessibility is due to the fact that the loans are tied to the value of the property. The recipient of the loan does need to have the best credit to get the best deal, since the value of the property remains the most important factor in assessing collateral for the loan.

More than that, since the lender no longer has to check the applicants’ credit history or evaluate their ability to repay the loan, the approval procedure lasts much less. This is excellent news for investors caught in the middle of a rehabilitation project with not enough money to complete the works, for those who could use additional funds to stage the property they intend to sell or perform maintenance or repair works before putting a property for sale.

Banks or Private Lenders?

hard-money-lenders | HardMoneyMan.com LLC

Banks do not usually give loans in these conditions because of the high risk of default, and even if they did, they would probably cause the real estate investor to lose money due to the long waiting periods.

The same risk determines private lenders to ask for higher interest rates. However, while comparing the interest rates charged by the two types of lenders leads to significant differences, the overall costs of the loans are not that high, because the loans are only taken for short periods of time.

More than that, the projects hard money lenders fund are usually very profitable, involving that the borrower acquire a property at a very low price, rehabilitate it, stage it, and sell it for a much higher amount.